26 Apr 2011 07:00
China Private Equity Investments Holdings Limited
("CPE" or the "Company")
The Company's principal activity is to invest in growth companies operating in Greater China
Repurchase of Fortel ordinary shares
The Board of CPE is pleased to announce that Fortel BVI ("Fortel"), one of its portfolio companies, has repurchased 5,503 of the ordinary shares of US$ 0.01 in Fortel held by CPE TMT Holdings Limited ("CPE TMT"), a wholly owned subsidiary of CPE.
The repurchase is at an agreed price of US$690.50 per share and values Fortel at US$72 million. CPE retains a residual 33.60% stake in Fortel, from 37.1% previously. The repurchased shares will be cancelled.
The agreement by Fortel to repurchase the shares from CPE TMT follows the issue by Fortel of a US$6.8 million convertible loan note to Amazing Quality Investments Limited, which is a wholly owned subsidiary of Asia Private Credit Fund Limited, a fund managed by Gen2 Partners Investment Management Limited (www.gen2partners.com). The convertible loan note, which has a coupon of 12%, will convert into Fortel shares representing approximately 9% of the issued share capital at the time of a public listing of Fortel shares.
Of the US$6.8 million raised by the issue of the convertible loan note, US$3.8 million has been paid to CPE for the repurchase of the Fortel shares, and US$3 million will be used by Fortel as general working capital for business expansion ahead of its planned listing on the Hong Kong Stock Exchange later this year.
CPE plans to use the US$3.8 million raised by the transaction to provide further funding for its core objectives of investing in companies that operate in China, have significant exposure to the Chinese market, or aim to benefit from CPE's experience in order to enter the Chinese market.
Hong Kong-based Fortel is well positioned to become the premier electronic content publishing and distribution network in Greater China by providing an integrated content distribution platform known as the Fortel Online Content Utility System ("FOCUS") to support convergent, streaming, and social media services. FOCUS enables content providers to deliver their content to customers by integrating content servers, payment collection and settlement interfaces, customer databases as well as network security services.
Fortel also operates a social networking site in China called iHompy (www.ihompy.com), which is a leading community site with over half a million registered users connected through a common theme of photography and photo storage. It works closely with leading search engines and e-commerce operators in China such as Baidu (www.baidu.com) and Taobao (www.taobao.com).
In 2009, Fortel achieved profits of HK$34 million (US$4.6 million).
The repurchase of CPE's shares in Fortel is deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies as prior to the transaction, Duncan Chui, Chief Executive of CPE, was beneficially interested in 45.0% of Fortel shares. Following the cancellation of Fortel shares, his beneficial holding has increased to 47.8%. The directors of the Company, excluding Duncan Chui, having consulted with Shore Capital and Corporate Limited, the Company's nominated advisor, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.
CPE Chief Executive Duncan Chui said: "This realisation of value in Fortel marks an important step forward for CPE at the end of our first 18 months on AIM, in line with our commitment to provide solid returns for shareholders. Fortel is now in the run up to a listing of its own, and as with our acquisition last month of a stake in Enfinium, we continue to seek further opportunities to capitalise on the growth potential waiting to be unlocked in China."
For further information, please visit www.cpe-invest.com or contact:
China Private Equity +852 2801 6770
Investments Holdings Limited
Duncan Chui / Ernest Wong
Shore Capital and Corporate +44 (0)20 7408 4090
Limited (Nominated Adviser)
Stephane Auton
First City / Tavistock +852 2854 2666
Public Relations
Allan Piper
Simon Hudson / Lydia Eades